Wednesday, 9 June 2010

Counterfeit contagion and the Gordian knot

These articles (here, here and here) portray the extent of counterfeit crisis ahead of the World Cup in South Africa. Yet is it a problem that ought to have been anticipated and could anything have been done about it by Fifa, the government or the event's official sponsors?

The articles linked to above may provoke empathy for the locals enjoying the fruits of the counterfeit industry or sympathy for the "innocent" entrepreneur who has spotted an opportunity. After all counterfeiting creates employment and a counterfeit shirt - how harmful can that be?

The problem is that the behaviour perpetuates a mindset that copying is okay, that big brand owners can afford to be ripped off and perhaps even ought to be - how can they charge so much for a shirt ($80) that I can produce (or get produced) at a fraction of the price ($5) ? Once this thinking becomes popular the fight against counterfeits becomes significantly more difficult.

A counterfeit shirt is one thing, a counterfeit spare part that endangers lives, counterfeit software that fails to prevent a car hijacking and counterfeit drugs that fail to contain the spread of disease are quite another. And let's not downplay the counterfeit shirt. We have seen it used to transport illegal drugs under its neck labels and exploit child labour in its production.

This all threatens to become another strand in what has been dubbed Fifa's Gordion Knot and in turn a headache for government.

So, what could have been done? Is it possible to have sold official shirts for $5-$10 so that the counterfeit market is/was eliminated, for example? Could Fifa or the RSA authorities have insisted on it?

Could the brand owner have still benefited - eg if you combine a cut price strategy with an effective communication campaign official could brand owners win customers in higher earning countries (where they can sell their shirts for more) and in Africa would they win market share? Evidence suggest that strategies like these work. Coke, for example, is probably the best known brand in Africa because they made their product and brand available in even the poorest (financially) of African countries many years ago and one of the ways in which Microsoft is combating its Kenyan software piracy problem is by selling their product at a significantly reduced price.

Or is it a problem with anti-counterfeiting laws and enforcement or that brand owners simply cannot compete with counterfeits often produced in the East?

Your views would be most welcome? This Afro Leo has to go for now - it is not even 6am and a Vuvuzela is pounding outside. The rooster has cried.

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